Madison Wisconsin's Estate Planning Blog

So you have done the hard work of establishing an estate plan. Good for you! However, you still have serious work to do to ensure that the strategy you have selected will maximize your peace of mind and protect your legacy. 

Estate plans should be like living, breathing creations that reflect the changes in your life. Your life can and will change due to new births, children getting older, and other shifts in the family; changes to your investment portfolio, career and business; and changes to your health, where you live, and your core values. Likewise, external events, such as new tax legislation passed in your state or the development of a novel financial instrument, can throw your plan off track or open the door to new opportunities.
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Whether or not you currently have estate planning documents, one important item to add to your calendar is getting an estate plan checkup.

Don’t Have an Estate Plan? 

If you don’t already have an estate plan, then getting one in place should be at the top of your to-do list.

Why?  Because without an estate plan, you and your property may end up in a court-supervised guardianship if you become incapacitated, and your property and your loved ones may end up in a time-consuming and expensive probate proceedings after you die.

Worse yet, if you don’t take the time to have any estate planning done, then the state where you live at the time of your death will essentially write one for you. It may not divvy up your property the way you would have and certainly will not protect your heirs the way you would.
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Please allow us to be frank. It’s unrealistic to think that a piece of paper you draft, reflecting your life at a certain time, will work when your life has completely changed some years later. We’ll use the Kendrick family as an example.

Meet the Kendricks

Meet Bill and Karen Kendrick. They got their first estate plan in place when their daughter, Jessica, was born 30 years ago.
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If you become incapacitated, who is going to take care of you?  You will not be able to make medical decisions for yourself and you will not be able to manage your day-today affairs.  If you do not have the appropriate estate plan in place, your family may be headed to the probate court long before you are deceased.

Conservatorship or Guardianship Proceedings

In some states a living probate is referred to as a guardianship or conservatorship proceeding. When someone is unable to manage his or her own affairs – often due to illness or older age – family members may need to seek court intervention to appoint a conservator or guardian. This court-appointed individual is authorized to make financial decisions on behalf of the incapacitated person; the same person or sometimes a different individual also appointed by the court will take over control of everyday matters including medical decisions.
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Sometimes giving assets outright to a beneficiary – such a child, a grandchild or a special needs loved one – is not the ideal method of distributing assets in an estate plan. In such a scenario, a discretionary trust can be a good estate planning tool. Below is some basic information on discretionary trusts and how they may be beneficial to your particular family’s needs.

Discretionary Trusts Explained

A discretionary trust is a type of trust that is set up for the benefit of one or more beneficiaries. In this particular type of trust, however, the trustee is given full discretionary authority to decide when and what funds – such as principal or income - are given to which beneficiaries.
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When most people think of estate planning, they think of assets that include money, real estate, and personal property. But, included in someone’s estate could be invaluable personal property, such as family heirlooms or keepsakes. This type of property should not be overlooked in your estate plan just because it may not have a high dollar value because it still has sentimental value that cannot be quantified. Part of a thorough estate plan is determining how you want these priceless family heirlooms and keepsakes distributed once you are gone.

Issues You May Face

An “heirloom” is a particular piece of personal property passed down from one generation to the next, and will continue to be passed down for generations to come.

Whether or not you have an estate plan in place, you have likely heard the term “probate”. Probate is the legal process by which a deceased individual’s assets are distributed under court supervision. This process is necessary to distribute assets that are solely in the name of the deceased person. Probate is governed by state law.

Avoiding Probate

One of the appealing aspects of putting together an estate plan is to avoid probate.
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Estate plans are almost magical: They allow you to maintain control of your assets, yet protect you should you become incapacitated. They take care of your family and pets. And, if carefully crafted, they reduce fees, taxes, stress, and time delays. Estate plans can even keep your family and financial affairs private. But one thing estate plans can’t do is update themselves.
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If you have a loved one with disabilities, you may be familiar with “ABLE” accounts, authorized by Congress in 2014 under the Achieving a Better Life Experience Act.  ABLE accounts are tax-advantaged savings accounts–similar to 529 education savings plans–whose funds can be used to pay for certain qualifying expenses of disabled individuals. As a result of the Tax Cuts and Jobs Act (TCJA), there are several changes that affect ABLE accounts

What You Should Know

First, a 529 account can now be rolled over to an ABLE account. However, the ABLE account must be for the same beneficiary as the 529 account or for a member of the same family. Previously, families who originally funded a 529 account for a child whose disability manifested later in life would suffer a tax penalty if the funds were withdrawn from the 529 account to cover medical expenses because they were not allowable education expenses.
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A scary health diagnosis can be emotionally and logistically challenging for many reasons. For instance, how can you take care of your family if you’re physically incapacitated? In addition to working closely with your medical providers, consider these three legal tips:

1. Check your estate plan with your attorney to make sure it is up to date.

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